Hershey's new product in China will get a US launch

Updated: 2013-10-12 05:55

By Michael Barris in New York (China Daily)

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Hershey's new product in China will get a US launch 

Hershey's Lancaster brand launched early this year in China will be available in the US in January. Courtesy of Hershey 

It took its sweet time getting here. That's because it had to go through China.

US candy titan Hershey Co said it would launch a new product in the United States in January – a caramel confection called Lancaster, after its debut in China earlier this year. It is the Pennsylvania candy maker's first completely new product in 30 years.

Hershey, known for its iconic Hershey chocolate bar, Hershey's Kisses, and Twizzlers licorice, rolled out Lancaster in Wuhan, Hangzhou and Chengdu in June.

The US launch caps a new process which developed the same product for two markets simultaneously, Hershey spokesman Jeff Beckman said in an interview. Although the candies carry the same brand name and similar packaging, their tastes were tweaked to fit their respective markets.

"The product that launched in China last spring is a bit different from the product that will roll out into stores in the United States in January," Beckman said. "The difference reflects how we tailor our branded products to different tastes and palates of consumers in different regions of the world."

The China product is a traditional "milk candy", "slow-roasted for a rich taste", Beckman said. The taste has "more milky overtones that consumers in China expect from candy in this segment of the confectionery market." In China, the category accounts for about one quarter of the confectionary market, according to Advertising Age.

By comparison, the Lancaster soft crèmes that will be launched in the US next year are a caramel-based product with "deep caramel flavor" and a sweet and salty taste that is "distinctly different" from the China product, Beckman said.

The two products are also made in their respective markets with different technologies, Beckman said. Lancaster will be produced in Hunan province by a local confectionery maker using imported milk. The packaging is similar in both countries, showing images of the silhouette of a man (a reference to company founder Milton Hershey), a cow; and a pot and wooden spoon. But in China, the package carries a Chinese name, Yo Mon, as well as the Lancaster name in English.

By giving the new brand its start in China, Hershey departed from a time-honored tradition of launching brands in the US first. The product's name refers to the Pennsylvania town and namesake of the Hershey Co's original name – the Lancaster Caramel Co. Hershey, based in Hershey, Pennsylania, originally made sweet chocolate for caramel coating before creating the Hershey bar, according to the company's website.

It is the first time in three decades that Hershey has launched a new product that is not a brand extension or acquisition. Steven Schiller, Hershey's senior vice president for global sweets and refreshment, told Advertising Age that "we have not used China as a test market. The products were developed concurrently."

The company went live in China first partly to highlight the growing emphasis it is putting on the sweets market in China, the second largest behind the US, he said. Hershey and other US-based consumer goods companies are turning to growing markets such as China to offset slower growth in North America.

Sales of chocolate, candies and gum in China climbed 46 percent from 2007 to 2012, reaching more than 79.6 billion yuan, or about $13 billion, according to market research firm Euromonitor International.

Hershey has said it will spend "several million dollars" on its push into China's milk-candy market, estimated to be worth 7.5 billion yuan ($1.2 billion). It plans to increase the number of stores in China by 32 percent and its sales force by 60 percent in 2013 from a year earlier. It also has opened a Shanghai-based Asia Innovation Center, its second-largest research and development center world-wide.